DFM & BNM, what happened to ‘Rakyat Didahulukan’?

Please Mr. Honourable Deputy Finance Minister and BNM, can we have some common sense and responsible leadership around us? We are dealing with the rakyat’s livelihoods here. Which part of PM’s call for ‘Rakyat Didahulukan’ did you not understand?

It is understood the raid was sparked by complaints that gold delivery was late.

The question is, what caused the delay in the first place? What logical sense is there for any company doing brisk business and wanting happy customers (naturally) to purposely delay delivery of goods to their customers? Genneva Malaysia Sdn Bhd (GM) is no exception. Gold was delivered on the same day.

Then when sales volume spiked in February 2012, it was known that the company’s major local supplier was instructed by someone in Bank Negara Malaysia (BN) to stop supplying to GM. Due to the volume of sales, this move invariably resulted in delay of delivery. Despite this underhanded tactic, the company also endeavoured to fulfill all sales obligations, which they did, as mentioned by all customers who said they always get their gold.

So now, BN pinpointed GM’s fault in late delivery on one hand but on the other hand instructed supply to be stopped. Motive?

Also, GM was on the verge of delivering another batch of gold to customers when they were raided on 1/10/12. Where is the gold now? Just when GM wants to deliver gold to customers, the customers are then made to wait even longer by BN’s action.

Had BN not raided the company and business progressed as usual, all obligations to customers would have been fulfilled again, as usual.

That is why many are trying to understand this logic. GM was raided by BN on the pretext of protecting the customers. But the customers are contented with Genneva Malaysia. Instead the raid had caused nothing but misery to the very customers BN was supposed to protect!

And now BN say late gold delivery. And we wonder why?

As for the gold amounting to over 4,000kg that is still undelivered, the company had stated in its official statement that this figure appears grossly exaggerated.

2. “… had not received their cash reimbursements”

Again let’s look at the other side of this story.

In July 2012, news report began to surface quoting the National Fatwa Council as having said GM did not comply 100% with Syariah principles. View NST: Fatwa against Genneva deals

The National Fatwa Council did not engage with GM prior to the edict being issued. Therefore, the Council acted based on information provided by third parties. Naturally, the Council is duty-bound to inform Muslim customers of its ‘findings’ and on good faith that GM would take the necessary steps to rectify any non-compliance. It did not state Genneva Malaysia was illegal or ‘haram’.It was discovered later that the Council was briefed by an officer from BN prior to their edict.

It is likely that when the edict was issued, the Council was unaware of a plot against GM. It appears that the Council’s only intention was to see that Syariah matters were in order.

In August 2012, officers of Persatuan Pengguna Islam Malaysia (PPIM) publicized urging relevant authorities to take action against GM for non-compliance of Syariah and accusing the company of illegal deposit-taking. View The Star: PPIM lodges police report against gold investment company

It was discovered later that PPIM had also been briefed by someone from BN.

In August 2012, BN ran a series of advertisements against various scams but pictures of gold bars were prominently featured in the ads, suggesting a specific target. These were conducted on the back of the Fatwa Council’s edict and the Muslim consumer association’s publicity which were directed at Genneva Malaysia.

A picture was being meticulously painted.

The series of advertisements were effective for what it was intended for, spooking customers into selling off their gold holding with Genneva Malaysia. In layman terms, it invoked a run on the company. The sell-off was massive, to the tune of RM300mil each month in August and September 2012.

If customers ‘do a run’ on a particular bank where massive withdrawals are made, what do you think would happen to the bank?

Yet Genneva Malaysia was steadfast in committing to fulfill all sell-back/’redemption’ obligations.

Genneva Malaysia was about to release new batches of sell-back payments to customers when they were raided and everything had to come to a stand-still.

So what caused the delay in sell-back payments?

Had BN not raided GM and business progressed as usual, all obligations to customers would have been fulfilled again, as usual.

So instead of getting their payments, now customers are made to wait without an inkling of when this charade will be over.

Is GM supposed to be at fault here?

And how come BNM seem to have a hand in events leading up to Genneva Malaysia’s raid?

3. “… 20 – 25% higher than market price”

Inaccurate reporting, again. Or is it irresponsible presentation or intentional?

Goldsmiths buy wholesale and sell retail. Every trade does so. The difference in wholesale and retail price, less costs, is profit. Then GM chooses to share this profit with its customers. What is wrong in benefiting customers? Is there any law against such practice?

But there appears to be an unwritten law against GM for wanting to benefit its customers. Could the central bank be pressured to act against a legitimate, innovative, successful and growing company simply because its mere existence is a business threat to some institutions?

4. “… has not been a sustainable venture”

The unprecedented scale raid created an impression the authorities had solid proof of wrong-doing. If so, such proof should have easily been laid bare immediately after the raid since proof was already in hand. But it took them 4 long days before an official statement was made that GM was raided based only on suspicion of committing a list of six offenses. None included unsustainability of business.

Now, two long months later, attention has shifted to ‘unsustainability’.

So after 3 years of always delivering to its customers, BN decided to raid the company and declare it unsustainable?

Incidentally, which central bank in this world governs a company’s business sustainability? There are companies that declare losses in an accounting year. Does it mean these companies would be raided too?

Highly-geared public-listed companies are allowed to restructure in order to be sustainable in business. That means prior to restructuring, they would be deem unsustainable. So would they be raided too?

Individuals with mounting debts can seek AKPK’s advice to restructure their debts and become sustainable. Otherwise would these poor chaps be raided too for being unsustainable?

Was Proton sustainable if the government did not step in? So individuals, SMEs and public-listed companies that became unsustainable were given every opportunity to become sustainable.

Yet GM which has been delivering and benefiting its customers for the past 3 years have been raided, operations seized and labelled unsustainable when they were doing fine without the raid.

Where is the sense of justice here?

This article merely states that assets seized can be returned to the rightful owners via a third-party suit filed to the court, only if there are criminal proceedings.

Also, any action against any investment companies can only be taken if these companies breached AMLATFA 2001 provisions.

In the case of GM, there are no criminal proceedings against the company. It is not an investment company, but merely a gold trading company dealing in buying and selling of gold. AMLATFA covers money-laundering, not business unsustainability.

Donald Lim said “Any action by enforcement agencies and Bank Negara must show proof of offences committed. This is to avoid rushed enforcement actions without cause, which can disrupt legitimate businesses.”

In Genneva Malaysia’s case, his statement contradicted BN’s actions. GM was raided without any proof being shown of any offences committed, resulting in a legitimate business being disrupted and 300,000 rakyat suffering daily for the past 2 months.